IND-517-02 Rejection: Which Dependent Is Causing the Issue?

Taxpayers filing electronically may encounter an IND-517-02 rejection, which prevents their return from being processed. This error relates to a dependent listed on the tax return and must be resolved before resubmitting.

Reason for the IND-517-02 Rejection

This rejection occurs when the IRS detects a conflict with a dependent’s information. The most common reason is that the Social Security number (SSN) or Individual Taxpayer Identification Number (ITIN) has already been used on another tax return. This often happens in shared custody situations, where both parents attempt to claim the same child. Under IRS rules, the parent with whom the child lived for more than half the year is entitled to claim them unless the noncustodial parent has a signed Form 8332 granting them the right.

In some cases, the issue stems from an IRS database mismatch. If a dependent’s SSN was recently issued or updated, the IRS may not have processed the change. A dependent’s name change due to marriage, adoption, or other legal reasons can also cause a mismatch.

Dependent Data Entry Errors

Even if no one else has claimed the dependent, incorrect information can trigger an IND-517-02 rejection. A single-digit mistake in an SSN or a name that doesn’t match IRS records can cause the return to be rejected. The IRS verifies dependent details against Social Security Administration (SSA) records, so minor discrepancies—such as a misspelled last name or an extra space—can lead to an error. This is especially common with hyphenated surnames or multiple middle names.

Birthdate errors also cause rejections. If the date of birth does not match IRS or SSA records, the system may flag the return. A taxpayer mistakenly entering the wrong year or transposing digits, such as listing 2015 instead of 2011, can affect eligibility for tax benefits like the Child Tax Credit.

Another issue involves ITINs. Some dependents, particularly non-U.S. citizens, have an ITIN instead of an SSN. If a taxpayer enters an SSN when the dependent only has an ITIN, or vice versa, the IRS system will not recognize the dependent. ITINs also expire if not used on a tax return for three consecutive years, leading to filing errors.

Duplicate Dependent Issues

When a dependent appears on multiple tax returns, the IRS does not determine who is entitled to claim them. Instead, it rejects the later-filed return, leaving the taxpayer responsible for resolving the issue.

Shared custody arrangements are a common source of these conflicts. While IRS rules generally grant the exemption to the custodial parent, misunderstandings or informal agreements can lead both parents to claim the same child. If the other filer refuses to amend their return, the legitimate claimant must take additional steps to secure their tax benefits.

Identity theft can also cause duplicate dependent claims. Fraudulent filers sometimes use a child’s SSN to claim tax credits they are not entitled to, particularly refundable credits like the Earned Income Tax Credit. Taxpayers who suspect fraud may need to file an Identity Theft Affidavit (Form 14039) with the IRS to initiate an investigation. Resolving these cases can take months, delaying refunds and requiring additional documentation.

Steps to Correct the Return

The first step in resolving an IND-517-02 rejection is to review the IRS notice, which specifies that a dependent’s information caused the issue. Electronic resubmission will fail unless the problem is fixed, so taxpayers must determine whether the rejection stems from a duplicate claim or an administrative error. Checking prior-year tax returns can help verify whether the dependent was successfully claimed in the past and whether any changes in eligibility have occurred.

If another taxpayer improperly claimed the dependent, direct communication may resolve the issue. If the other filer refuses to amend their return, the only option may be to file a paper return and let the IRS conduct a review. Attaching supporting documents, such as school or medical records proving residency, strengthens the claim. The IRS follows tiebreaker rules under section 152(c)(4) of the Internal Revenue Code when multiple taxpayers claim the same dependent, prioritizing the parent with whom the child lived the longest or, if time is equal, the filer with the higher adjusted gross income (AGI).